The International Monetary Fund proceeded with its record 2010 bailout of Greece despite deep internal divisions over whether it would work, according to confidential documents that contradict the fund's public statements.

The new details of the rift come as the crisis lender is now pressing European governments to forgive some of the country's debt in a fresh round of difficult talks. The idea is unpopular with Germany and other European nations because their taxpayers would take the hit. But it stands a chance because...